IN-DEPTH: IRS' line is 'clear as mud' for nonprofits, politics

It's hard to tell if 9 targeted groups meet agency's criteria

May 19, 2013

Richard Ringo, a member of The Ohio Liberty Council, a coalition of tea party groups and conservative organizations, at a Columbus demonstration in 2011. The group, now called the Ohio Liberty Coalition, is part of the controversy at the IRS. / AP

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The rules

The IRS’ nonprofit regulations stipulate that 501(c)(3) nonprofits can educate on issues, but cannot conduct any political activity (getting involved in any elections for public office). Such designations are usually for churches and other charities. A 510(c)(4) designation is for so-called “social welfare or education” groups, which also can advocate for certain issues or referendums. But these groups can also participate in limited political activity, including fund-raising and endorsements, as long as it does not comprise the “primary activity” of the organization.

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The nine regional groups recently approved for nonprofit status and part of the controversy at the Internal Revenue Service are conservative, many are linked in some way, and all are involved in some level of policy advocacy or political activity, an Enquirer examination finds.

But it is difficult to discern whether they are staying within the guidelines set out by the IRS when it comes to nonprofit status and political or election-oriented activity, according to a review of the organization’s documents and websites.

“That line as to what is acceptable activity is about as clear as mud,” says Jeremy Koulish, a research associate specializing in nonprofits with the Urban Institute, a Washington-based nonpartisan economic and social policy think tank.

The IRS this week released a list of 176 organizations that had undergone the controversial vetting and had since been approved as a nonprofit. That list included nine organizations from Ohio and Kentucky ranging from local tea party groups to organizations supporting conservative statewide issues.

The IRS has previously acknowledged that Cincinnati-based agents improperly used such search terms as “tea party,” “patriot,” and “9/12” to centralize and speed the nonprofit application process for such groups. The IRS has denied this was to target such groups for partisan reasons, and instead described it as a way to streamline the approval process as the agency saw an explosion in such applications in the years leading up to the 2012 presidential election.

A total of 470 groups were targeted, but by law, the IRS cannot give any status update on those still awaiting approval, nor can it say what groups have been denied.

One statewide group in Ohio says it follows the vague rules set out by Congress and the IRS.

“We don’t endorse any candidates but we do examine the issues, and we ask our voters to align their values and vote their values,” says Joshua Burton, a Fairfield Township organizer for the Columbus-based Faith and Freedom Coalition, the Ohio branch of evangelist Ralph Reed’s national organization.

Burton says it took 18 months to receive nonprofit status from the IRS, calling the delay and the 138 different questions the organization had to answer “a clear attack on our freedom of speech.” (Normally, organizations can wait anywhere from three to six months for approval, although some have waited longer.)

He acknowledges his organization does provide voter guides and voter education programs for evangelical churches. The organization was reported to have distributed more than 5,000 pamphlets in Ohio churches in the days leading up to the 2012 presidential election.

That kind of activity makes it difficult for the IRS to determine what falls within the regulations for nonprofits, experts say. While the guides didn’t endorse or advocate a certain candidate, they clearly were aimed at conservative voters, which may have crept up to what is a hard-to-define boundary.

“There’s no real obvious way to figure out way who is doing true advocacy work, and its even harder to figure out who crossed that fuzzy line into too much political activity,” Koulish says. “And part of the responsibility for these nebulous definitions goes toward Congress for its inability to to set what counts as legitimate activity and what is not.”

One local tax attorney even goes as far as to advise his nonprofit clients to avoid any “electioneering,” even while saying follow-up questions of any nonprofit application is not unusual at all, especially for so-called advocacy groups.

“It is indeed a fuzzy line, and I always say they are inviting extra scrutiny by engaging in that kind of activity,” says tax lawyer Ben Cramer of Anderson Township. “Now this line is going to become the issue, because if they don’t enforce it, we are now taxpayers to foot the bill for electioneering instead of educating voters.”

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What the advocacy nonprofits can, cannot say

All nine regional groups were approved as 501(c)(4) status, and all were focused on conservative ideals or causes (although the national list included some 501(c)(3) groups as well as progressive groups).

One included the Kentucky 9/12 Project out of Lexington, Ky. The 9 and 12 stand for the “9 Principles,” such as “America is good,” “I believe in God and he is the center of my life,” and the “12 values,” including honesty, reverence, hope, and charity – which is also the foundation of a national umbrella organization called the 9/12 Project that has been touted by conservatives nationwide, including by commentator Glenn Beck.

The group received its tax-exempt status approval on April 1 after waiting 18 months, executive director Eric Wilson said. It has a two-day seminar planned for Friday and Saturday in Elizabethtown, Ky., on how to run a “values-based” campaign.

Sharonville attorney David Langdon was linked to two of the other groups: Ohio First For A Better Government, Inc. and Protect Your Vote Ohio. Langdon is also on the board of directors of the conservative law organization the 1851 Center for Constitutional Law in Columbus.

Dayton-based Ohio First has since changed its name to the Jobs and Progress Fund. Its primary purpose appears have beento oppose the position of U.S. Rep. Aaron Schock, R-Ill., who was trying to negotiate an end to the fiscal cliff situation last year. Its website says its mission is to promote “limited government and the support of market oriented, entrepreneurial policies on the part of local, state and federal governments through grassroots and media advocacy.” It broadcast anti-Schock ads in Illinois throughout the fiscal cliff crisis last year. A previous report by Crain’s Chicago Business stated that the group was incorporated by Langdon, who declined comment and wrote in an email that he would send any questions to those involved in the group.

Koulish says such negative ads are well within the limits for such advocacy nonprofits. “You can’t say ‘vote for candidate X,’ but you can certainly say ‘candidate Y wants to raise your taxes, tell him not do that,’” Koulish says. “Right now, that is completely kosher for these (nonprofits).”

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Another group, Protect Your Vote, was formed in Columbus to fight last year’s proposed constitutional amendment that would have changed Ohio’s redistricting process. The organization’s web site is no longer functioning, although the nonprofit, nonpartisan campaign finance site www.followthemoney.org reports that the group received more than $8.2 million in contributions in 2012.

Langdon had been listed as treasurer for this organization as well, according to previous news reports. The measure, which would have put redistricting authority into the hands of a citizen panel, was soundly defeated last year.

'We've been fighting to get nonprofit status'

Other groups on the regional list include smaller, grassroots organizations as well as other issues-based groups. These include the Wilmingon-based Clinton County Tea Party, the Cincinnati 9 12 Project Inc. from Loveland, and the anti-Obamacare group Ohioans for Healthcare Freedom, Inc. No one responded to requests for comment from any of these groups.

Ohioans For Healthcare Freedom, Inc. received nearly $820,000 in donations in 2011 alone, according to followthemoney.org. The group also opposes Ohio Gov. John Kasich’s attempts to expand the state’s Medicaid system, according to its Facebook page. A message left on that page was not answered.

Finally, the list includes the Ohio Liberty Council Corp., which has since changed its name to the Ohio Liberty Coalition. The Tiffin, Ohio-based group describes itself as an umbrella group for other tea party groups throughout Ohio. One of its founders was Cincinnati activist Chris Littleton, who is a former president of the Cincinnati Tea Party. Liberty Coalition president Ted Stevenot, who is also president of the Clermont County Tea Party, said the group received its approval in December after a nearly two-year wait.

“We are trying to look out for all our smaller members – they are really involved in the issues and they don’t have a lot of resources,” says Stevenot, a Union Township insurance broker. “We’ve been fighting to get our nonprofit status for so long and are glad we wound up being proven right.”⬛